2015 (8) TMI 954 - AT - Service Tax

Business Auxiliary Service - Display of exhibitions - amount received from members and non-members of the Association / Chamber - Held that - Appellant has received an amount from the members of the association as well as from non-members. We find strong force in the contention raised by the learned Counsel as regards the service tax liability on the amount received from the members, no tax liability arises and is covered by the judgement of Hon ble High Court of Gujarat in the case of Karnavati Club Ltd (2009 (9) TMI 561 - GUJRAT HIGH COURT) and by the Hon ble High Court of Jharkand in the case of Ranchi Club Ltd. (2012 (6) TMI 636 - Jharkhand High Court). To that extent appeal needs to be allowed and the impugned order needs to be set aside. Consequently the liability of interest and penalty also needs to be set aside; as the appellant is an association of Housing Industry and conducts various exhibitions for benefit of builders etc. who are members. - Decided in favor of assessee. As regards the demand raised on the amount received by the appellant from the non-members, the service tax liability does arise - While upholding the demand of service tax and interest, levy of penalty waived invoking the provisions of section 80 - Decided partly in favour of assessee.

Summary

Issues involved:
Demand of service tax liability under Business Auxiliary Service for an exhibition conducted during October 2004 to December 2004.

Analysis:

1. The issue in this case revolves around the demand of service tax liability under the category of Business Auxiliary Service for an exhibition organized by the appellant from October 2004 to December 2004. The revenue authorities contended that the appellant should discharge the service tax liability on the amounts collected from both members and non-members. A show-cause notice was issued invoking an extended period of limitation, demanding service tax, interest, and penalties. The appellant challenged the notice, arguing that the service tax liability did not arise during the material period stated in the notice. The adjudicating authority disagreed with the appellant's contention, confirming the demands and penalties. On appeal, the first appellate authority upheld the service tax liability and interest but set aside the penalties, considering the appellant's payment of the service tax and lack of malicious intent due to the introduction of service tax liability on Business Auxiliary Service at that time.

2. The appellant's representative highlighted that the entire issue pertains to the demand of service tax liability under Business Auxiliary Service for the period of October 2004 to December 2004, and argued that the show-cause notice issued in August 2006 was time-barred. It was contended that the amount collected from members was not taxable based on legal precedents such as the judgments in the cases of Karnavati Club Ltd. v. Union of India and Ranchi Club Ltd. The Departmental Representative countered by stating that the appellant did not raise the issue of limitation before the lower authorities and sought closure of the matter based on Section 73(3) of the Finance Act, 1994.

3. Upon reviewing the submissions from both parties, the Tribunal acknowledged the core issue of determining the tax liability under Business Auxiliary Service for the exhibition conducted by the appellant. It was established that the appellant fell under the service tax liability category during the relevant period. The Tribunal agreed with the appellant's argument regarding the non-taxability of the amount received from members, citing relevant High Court judgments. Consequently, the Tribunal set aside the impugned order, including the interest and penalties. However, regarding the amount received from non-members, the Tribunal upheld the service tax liability and interest. Notably, the penalty was set aside under Section 80 of the Finance Act, 1994, due to the introduction of tax on the services during the relevant period.

4. The Tribunal also addressed the issue of limitation, noting that since the question of limitation was not raised before the lower authorities, it could not be considered in the second appeal proceedings. Ultimately, the appeal was disposed of by allowing it in part, setting aside the impugned order concerning the tax liability on amounts received from members and non-members, while upholding the demand and interest on the amount received from non-members but setting aside the penalties levied.